The M/V Kittitas is one of six Issaquah Class ferries that could be converted to burn LNG
OIL BOOM ENERGIZES SHIPBUILDING Increasing offshore oil and gas production drives orders for tankers, OSVs By John R. Snyder, Publisher and Editor-in-Chief
few years ago a very wise if not somewhat curmudgeonly observer of the maritime industry stated that there would never be another product tanker built in the U.S. It seemed a fairly sensible prediction at the time given that the Articulated Tug Barge had emerged as the vessel of choice to move refined products because of advances in design, construction and operational costs and a dwindling U.S. shipbuilding base. Now, driven by the changing U.S. energy picture, which will see America produce more oil than Saudi Arabia by 2017, Jones Act product tankers are once more in demand. At a presentation at Marine Log’s 2013 Tugs & Barges Conference, last month, Charlie Papavizas, the Chair of the Maritime Group Practice at Winston & Strawn LLP, pointed to the production boom of “light, tight oil” in the U.S. While the oil is ideal for refining into gasoline, getting it to East Coast Refineries isn’t easy due to a lack of pipeline, rail, terminal and Jones Act tanker vessel capacity. Papavizas said the capacity problem was expected to worsen as oil production rose to 9 million barrels of oil in 2020, up from the current 4.6 million barrels of oil per day. Refining capacity was expected to increase to only 8 million bbl/day by 2020. Some of that crude oil may wind up being exported, perhaps even to Canada under export licenses for refining and re-exporting back to the U.S. For now, however, the oil boom is having a positive impact on the Jones Act market, says Papavizas. He feels as many as 10 to 12 new product tankers will be needed to meet demand. Reinauer, Kirby, Crowley Maritime and Bouchard are also adding new ocean tank barges with building programs at Senesco Marine, Signal International and VT Halter Marine.
AMERICAN PETROLEUM TANKERS ORDERS FOUR As if on cue, one week after the conference, an affiliate of Jones Act operator American Petroleum Tankers inked a deal with General Dynamics NASSCO, San Diego, CA, for the design and construction of four 50,000 deadweight ton “LNG-conversion-ready” product carriers with a 330,000 barrel cargo capacity. The contract includes options to build four more ships. NASSCO will start building the first tanker in the third quarter of 2014, delivering the ships from the fourth quarter of 2015 through 2016. The four-ship APT contract will add about 800 jobs at NASSCO during construction and more than 165 seafarer jobs when the ships go into operation. The 610-foot-long tankers are a new “ECO” design from DSEC, a subsidiary of Korea’s Daewoo Shipbuilding & Marine Engineering. The ECO design offers improved fuel efficiency—it will have a slow-speed MAN ME G-type engine and optimized hull—and incorporates the latest environmental protection features, including a Ballast Water Treatment System. The tankers will have dual-fuelcapable auxiliary engines and the ability to accommodate future installation of an LNG fuel-gas system. The contract with APT follows five months after NASSCO announced a groundbreaking order with TOTE Inc., to build two LNG-fuelled 3,100 TEU containerships for the Jones Act. NASSCO President Fred Harris, said, “By continuing to bring the most economical and environmentally sound technology to Jones Act operators, these ECO tankers show our continued commitment to be one of the most innovative shipyards in America.” Clearly, more vessels powered by LNG are in the pipeline, which June 2013 MARINE LOG 29